Lower fees are just one emerging trend benefiting retail investors.
Jupiter and Baillie Gifford have become the latest two fund management firms to publish annual jargon-free fund reports on the “value for money” offered by their fund products.
The reports, ordered by the Financial Conduct Authority last September, focus on fund performance and charges.
The FCA has set out seven “value criteria” that the reports are required to address. These are: fund performance over an appropriate timescale relative to the fund’s objectives and strategy, investment manager’s costs, quality of service provided, comparable market rates of similar funds, cost of comparable services (for instance the cost of the fund to institutional investors or pension schemes), appropriateness of share classes, and whether economies of scale are being passed back to investors in the form of lower fund charges.
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Given that each fund management firm has different yearly financial reporting periods for funds, not all the value for money reports are currently available; some may not be available until the first quarter of 2021, as the FCA has given fund managers a two-month extension in light of the coronavirus pandemic. Fund managers temporarily have six months, instead of four, to publish the reports following their accounting year-end date.
That said, within the small sample of those published so far, some notable trends have emerged that are benefiting private investors.
Jupiter, for example, has reduced the ongoing charge figure (OCF) for 21 of the 40 funds in its range, a move that it says will benefit around 42,000 investors. The fund group has also closed three funds in the past year after coming to the conclusion that its investors could be “more effectively” served through other products.
Jupiter adds that, to the end of March 2020, 80% of investors’ assets were performing above the average for their peer groups over five years.
Baillie Gifford, meanwhile, has closed two funds and is keeping a close eye on the performance of five others due to performance concerns. The group says 87% of its 37 funds pass the value criteria tests set out by the FCA.
Other fund groups that have reduced fund charges or moved investors to cheaper fund share class following the publication of the value reports include Rathbone, Schroders, Invesco, Threadneedle and Artemis.
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